Latest news with #MohdAfzanizam
The Star
6 hours ago
- Business
- The Star
Fiscal consolidation pays off for Malaysia
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid KUALA LUMPUR: The country's fiscal consolidation efforts are beginning to bear fruit, with measures to narrow the fiscal deficit and reduce government debt gaining traction despite criticism, signalling a positive outlook for the country's sovereign credit ratings. 'Our foreign reserves have risen to US$119.9bil from US$115.5bil in the first half of 2025, while foreign ownership of Malaysian Government Securities (MGS) increased to 35.6% in May from 32% in January. 'This reflects a positive view of the government of Malaysia's creditworthiness,' Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid told Bernama. Although the country's fiscal position is improving, with the fiscal deficit narrowing to 4.5% of gross domestic product (GDP) from 5.7% previously, he highlighted that for the rakyat, fiscal consolidation translates to larger allocations for government assistance programmes, including the Sumbangan Asas Rahmah (Sara) and Sumbangan Tunai Rahmah (STR). As of the first half of 2025, Malaysia's fiscal deficit had improved to RM34bil compared to RM46bil in the same period last year. 'The government coffers are improving as fiscal consolidation progresses. The government allocated RM13bil for the STR and Sara programmes in 2025, the highest ever distributed for cash aid in Malaysia, compared to RM10bil last year,' he said. He further stated that the number of cash aid recipients had increased to 5.4 million from the previous 700,000 beneficiaries, showing that the assistance is now being better targeted rather than disbursed through blanket subsidies. Mohd Afzanizam noted that this could potentially lead to a more favourable credit review, with Malaysia's current sovereign credit ratings standing at A3 (Moody's), A- (S&P Global Ratings) and BBB+ (Fitch Ratings). 'The realignment of subsidies and continued fiscal consolidation will eventually yield positive outcomes and improve the government's financial position,' he said. Transitioning to external factors, Mohd Afzanizam said the global environment also has a bearing on Malaysia's economic outlook, particularly developments in the United States. He pointed out that the United States is no longer rated triple-A across the board, with current sovereign credit ratings at Aa1 (Moody's), AA+ (S&P Global Ratings) and AA+ (Fitch Ratings). 'This signals that the US government's ability to manage its debt is not as strong as before. 'All three major rating agencies now classify US debt around AA+ or Aa1, reflecting rising concerns over fiscal deficits, mounting debt levels and political gridlock,' he said. Mohd Afzanizam elaborated that the erosion of credit strength reduces the appeal of US assets and accelerates global de-dollarisation trends. 'Geopolitical tensions are also contributing to this shift, as more countries look to diversify their trade partnerships and reduce reliance on the US dollar,' he added. He also cautioned that recent US policy proposals could place further downward pressure on the greenback, citing the US Senate's proposal involving tax cuts totalling US$4.5 trillion, to be funded by reductions in social spending, including healthcare, aid programmes and clean energy subsidies.
The Star
2 days ago
- Business
- The Star
2Q 2025 GDP likely to grow 4.5-5.5% amid tariff rush
KUALA LUMPUR: Economists have projected the Malaysian economy to expand between 4.5 per cent and 5.5 per cent in the second quarter of 2025 (2Q 2025), driven partly by increased export demand, especially from the United States (US) importers due to heightened fears of impending tariff in August. Putra Business School Associate Professor Dr Ahmed Razman Abdul Latiff said the service, manufacturing and construction sectors are likely to contribute the most to 2Q 2025 growth. "I expect Malaysia's 2Q gross domestic product (GDP) to show growth. There is also a possibility that the mining and agriculture sectors would make a higher contribution to the economy," he told Bernama. The Statistics Department Malaysia (DOSM) is scheduled to announce the advance GDP estimates for 2Q 2025 on Friday, July 18, followed by an Aug 15, 2025 official announcement. However, Ahmed Razman cautioned that the growth momentum could decelerate in the second half of the year (2H 2025) once the US tariff comes into effect. Nevertheless, the recent reduction of the overnight policy rate (OPR) might catalyse the domestic market to generate higher demand for products and services, he said. On July 9, Bank Negara Malaysia's (BNM) Monetary Policy Committee (MPC) reduced the OPR by 25 basis points to 2.75 per cent, a pre-emptive measure to preserve Malaysia's steady growth path amid moderate inflation prospects. BNM last kept the OPR at 2.75 per cent in March 2023. It was increased to three per cent in May 2023. Sharing similar views, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said front-loading activities may benefit Malaysia's external sector. "We have seen exports to the US jump 33.6 per cent in the first five months of 2025. "This will sustain growth in 2Q 2025 along with Malaysia's full employment status, which will help propel consumer spending, coupled with investment activities in the private sector," he said. However, Mohd Afzanizam expressed concern that the 2H 2025 economic conditions will be more critical with the US tariff effective Aug 1, 2025. "We can expect US demand to moderate as Americans will have to pay more for imported goods. "The growth moderation will be transmitted in the 2H 2025," he said. Mohd Afzanizam expects 2025 full-year growth to slow to 4.1 per cent against BNM's earlier growth projection of between 4.5 and 5.5 per cent and 2H 2025 GDP to expand to 3.7 per cent. On July 8, the US unexpectedly imposed a higher tariff of 25 per cent on all Malaysian exports effective Aug 1, 2025, one per cent higher than the 24 per cent announced in April 2025. While negotiations for lower tariffs are ongoing between Malaysia and the world's largest economy, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said BNM is currently analysing this year's economic outlook and the tariff impact, and the official economic outlook remains unchanged. - Bernama
The Star
2 days ago
- Business
- The Star
Ringgit slips at opening against greenback as US rate cut hopes fade
KUALA LUMPUR: The ringgit opened lower against the US dollar today as the greenback strengthened on waning hopes of an interest rate cut this month by the United States. At 8 am, the ringgit dipped to 4.2480/2575 against the greenback, compared to Tuesday's close of 4.2395/2440. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US June Consumer Price Index (CPI) report released on Tuesday suggests that the inflation rate there is climbing, dashing hopes for an interest rate cut at the upcoming US Federal Open Market Committee (FOMC) meeting at the end of July. "The US CPI came in at 2.7 per cent higher year-on-year in June from 2.4 per cent in the preceding month and similarly, the core CPI rose 2.9 per cent during June after sustaining 2.8 per cent increases for three consecutive months," he told Bernama. Mohd Afzanizam also noted that China's second quarter gross domestic product (GDP) moderated to 5.2 per cent from 5.4 per cent in the first quarter, resulting in the Chinese yuan weakening against the greenback by 0.15 per cent to 7.1825 yuan. "In light of the latest US CPI and China's GDP, the ringgit could experience some knee jerk reaction with the US dollar-ringgit pair at around RM4.24-RM4.26 today," he added. At the open, the ringgit was traded higher against a basket of major currencies. It improved against the Japanese yen to 2.8552/8618 from 2.8702/8734 yesterday, strengthened against the British pound to 5.6893/7021 from 5.7047/7107, and gained versus the euro to 4.9311/9421 from 4.9539/9591. The local note trended mixed against ASEAN currencies. The ringgit trended firmer vis-à-vis the Singapore dollar at 3.3066/3145 from 3.3095/3133, and edged up against the Thai baht to 13.0355/0783 from 13.0784/0988. But it slipped against the Indonesian rupiah to 261.1/261.8 from 260.6/261.0 and dropped against the Philippine peso at 7.49/7.51 from 7.47/7.49 from Tuesday's close. - Bernama
Malaysian Reserve
2 days ago
- Business
- Malaysian Reserve
Ringgit slips at opening against greenback as US rate cut hopes fade
THE ringgit opened lower against the US dollar today as the greenback strengthened on waning hopes of an interest rate cut this month by the United States. At 8 am, the ringgit dipped to 4.2480/2575 against the greenback, compared to Tuesday's close of 4.2395/2440. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US June Consumer Price Index (CPI) report released on Tuesday suggests that the inflation rate there is climbing, dashing hopes for an interest rate cut at the upcoming US Federal Open Market Committee (FOMC) meeting at the end of July. 'The US CPI came in at 2.7 per cent higher year-on-year in June from 2.4 per cent in the preceding month and similarly, the core CPI rose 2.9 per cent during June after sustaining 2.8 per cent increases for three consecutive months,' he told Bernama. Mohd Afzanizam also noted that China's second quarter gross domestic product (GDP) moderated to 5.2 per cent from 5.4 per cent in the first quarter, resulting in the Chinese yuan weakening against the greenback by 0.15 per cent to 7.1825 yuan. 'In light of the latest US CPI and China's GDP, the ringgit could experience some knee jerk reaction with the US dollar-ringgit pair at around RM4.24-RM4.26 today,' he added. At the open, the ringgit was traded higher against a basket of major currencies. It improved against the Japanese yen to 2.8552/8618 from 2.8702/8734 yesterday, strengthened against the British pound to 5.6893/7021 from 5.7047/7107, and gained versus the euro to 4.9311/9421 from 4.9539/9591. The local note trended mixed against ASEAN currencies. The ringgit trended firmer vis-à-vis the Singapore dollar at 3.3066/3145 from 3.3095/3133, and edged up against the Thai baht to 13.0355/0783 from 13.0784/0988. But it slipped against the Indonesian rupiah to 261.1/261.8 from 260.6/261.0 and dropped against the Philippine peso at 7.49/7.51 from 7.47/7.49 from Tuesday's close. — BERNAMA
The Sun
2 days ago
- Business
- The Sun
2Q 2025 GDP likely to grow 4.5–5.5% amid tariff rush
KUALA LUMPUR: Economists have projected the Malaysian economy to expand between 4.5 per cent and 5.5 per cent in the second quarter of 2025 (2Q 2025), driven partly by increased export demand, especially from the United States (US) importers due to heightened fears of impending tariff in August. Putra Business School Associate Professor Dr Ahmed Razman Abdul Latiff said the service, manufacturing and construction sectors are likely to contribute the most to 2Q 2025 growth. 'I expect Malaysia's 2Q gross domestic product (GDP) to show growth. There is also a possibility that the mining and agriculture sectors would make a higher contribution to the economy,' he told Bernama. The Statistics Department Malaysia (DOSM) is scheduled to announce the advance GDP estimates for 2Q 2025 on Friday, July 18, followed by an Aug 15, 2025 official announcement. However, Ahmed Razman cautioned that the growth momentum could decelerate in the second half of the year (2H 2025) once the US tariff comes into effect. Nevertheless, the recent reduction of the overnight policy rate (OPR) might catalyse the domestic market to generate higher demand for products and services, he said. On July 9, Bank Negara Malaysia's (BNM) Monetary Policy Committee (MPC) reduced the OPR by 25 basis points to 2.75 per cent, a pre-emptive measure to preserve Malaysia's steady growth path amid moderate inflation prospects. BNM last kept the OPR at 2.75 per cent in March 2023. It was increased to three per cent in May 2023. Sharing similar views, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said front-loading activities may benefit Malaysia's external sector. 'We have seen exports to the US jump 33.6 per cent in the first five months of 2025. 'This will sustain growth in 2Q 2025 along with Malaysia's full employment status, which will help propel consumer spending, coupled with investment activities in the private sector,' he said. However, Mohd Afzanizam expressed concern that the 2H 2025 economic conditions will be more critical with the US tariff effective Aug 1, 2025. 'We can expect US demand to moderate as Americans will have to pay more for imported goods. 'The growth moderation will be transmitted in the 2H 2025,' he said. Mohd Afzanizam expects 2025 full-year growth to slow to 4.1 per cent against BNM's earlier growth projection of between 4.5 and 5.5 per cent and 2H 2025 GDP to expand to 3.7 per cent. On July 8, the US unexpectedly imposed a higher tariff of 25 per cent on all Malaysian exports effective Aug 1, 2025, one per cent higher than the 24 per cent announced in April 2025. While negotiations for lower tariffs are ongoing between Malaysia and the world's largest economy, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said BNM is currently analysing this year's economic outlook and the tariff impact, and the official economic outlook remains unchanged. - Bernama
